World Bank's Climate and Governance Disaster

Submitted by FOEAdmin on Fri, 09/04/2010 - 01:11

Both Earthlife Africa and groundWork, Friends of the Earth, South Africa are disappointed with the World Bank's decision to go ahead with its loan to Eskom for it's Medupi power station. By making this decision, the World Bank has shown, quite clearly, that it has no regard for the state of the world's climate and environment, the future of South Africa, and economic principles of transparency and corruption.

Both Earthlife Africa and groundWork, Friends of the Earth, South Africa are disappointed with the World Bank's decision to go ahead with its loan to Eskom. By making this decision, the World Bank has shown, quite clearly, that it has no regard for the state of the world's climate and environment, the future of South Africa, and economic principles of transparency and corruption. The World Bank is not a responsible lender.

The Medupi power station will put out about 30 million tons of CO2 per annum and, at a time when the world desperately needs to reduce global greenhouse gas emissions, the World Bank is actively funding coal. This is an assault on the livelihoods and way of life of global citizenry. Instead of using its financial resources to help developing economies leapfrog from carbon intensive development and promoting investment in clean and ultimately cheaper alternatives, such as wind and solar, the World Bank is propagating “business as usual”. This is akin to fighting a fire with petrol.

Tristen Taylor, Project Coordinator of Earthlife Africa Jhb, states, "Twenty years from now, people will look back and see this loan as a missed opportunity to change the world for the better. Eskom and the World Bank have made a monumental failure to appreciate not only the dire circumstances that humanity finds itself in but also the possibility of alternative, cleaner, and more efficient development. Today's children will judge them harshly in the years to come."

According to both local and international research, Southern Africa will be one of the hardest hit areas of the world as the climate warms. We will see droughts, species extinction, food shortages and spreading of diseases such as malaria. We will pay for this loan, not only in dollars, but also in the overall health and welfare of South Africa. The World Bank and its supporters do not have South Africa's long-term interests at heart.

As the loan is dollar based, this means that South Africa not only has a significant repayment risk in terms of currency exchange rates (if the Rand weakens to the dollar, the size of this loan will increase) but is also now forced to earn foreign currency to pay back this loan. The result will be a further entrenching of an export-orientated economy in raw materials; an economic model that has consistently failed, for the last hundred years, to eradicate poverty in the country. Paradoxically, an export-economy based on raw minerals extraction requires cheap electricity, thus deepening Eskom's revenue woes. Essentially, the easy path of World Bank money will come at a high cost in the decades to come.

Further, the World Bank seems to be completely unconcerned about the future water supply and air quality around Medupi. Bobby Peek, Director of groundWork, Friends of the Earth South Africa warns that, “the environmental and social cost of this development will impact on all South Africans as three major water catchments, the Limpopo, Vaal and Senque (Orange) River are all going to have their water diverted for Medupi and future power stations. Already our government has agreed that the Waterberg will exceed its air pollution carrying capacity in future. Not only is this area going to be a sacrifice zone, the entire country will, and the World Bank knows this but chooses to ignore it. They will be held accountable.”

Apart from these critical issues, the World Bank has made a complete mockery of own efforts to tackle corruption and promote good governance. The ruling party will benefit financially from the completion of Medupi (through its Chancellor House investment in Hitachi Power Africa) and hence the loan. What is the World Bank saying about open democracy and financial accountability? Nothing. Apparently not only is it okay for the World Bank to make this loan, in full knowledge of the ANC's windfall, the World Bank thinks that it is right and proper for the people of South Africa to pay back that loan, not the ANC.